EICHER MOTORS
EQUITY RESEARCH
REPORT
Company Overview
Eicher Motors Limited (EML) is a global automobile company headquartered in Chennai,
India. The company operates through two primary business segments:
1.Royal Enfield (RE): A global leader in the mid-size motorcycle segment (250cc-
750cc), renowned for iconic motorcycles like the Classic 350, Bullet 350, and
Himalayan 450. With over 2,000 retail touchpoints in 65 countries, RE exemplifies
handcrafted excellence and caters to motorcycle enthusiasts worldwide.
• VE Commercial Vehicles (VECV): A joint venture with AB Volvo, specializing in
commercial vehicles such as trucks and buses. VECV’s innovative engineering and
focus on connected vehicles have established it as a market leader in light and
medium-duty vehicles in India.
Market Positioning
Competitive Landscape:
• Eicher Motors faces competition from well-established brands in both its primary segments. In
the mid-size motorcycle market, competitors like Harley-Davidson and Triumph bring
formidable brand equity and premium offerings. However, Eicher’s Royal Enfield leverages its
unique heritage and cult-like following, especially in India, to maintain a dominant 88.5%
market share in this segment. Its consistent innovation—as seen in models like the Electric
Himalayan—helps it compete with global brands while addressing growing consumer demand
for sustainability and advanced technology.
• In the commercial vehicles segment, Tata Motors and Ashok Leyland dominate in terms of
volume. VECV, however, distinguishes itself with cutting-edge technology like telematics and
connected vehicles. The brand’s emphasis on fuel-efficient models and a strong focus on
customer satisfaction—evidenced by a #1 ranking in FADA’s Dealer Satisfaction Survey—
positions it well against incumbents.
Financial RATIO ANALYSIS
• Ratio Analysis In Comparison With Industry Standards
•Analysing Eicher Motors’ financial ratios in comparison to industry benchmarks provides a clearer picture of
the company’s performance within the automotive sector.
•1. Debt-to-Equity Ratio (D/E):
Eicher Motors: 0.02
Industry Average: Automotive companies often exhibit varying D/E ratios. For instance, during a study period,
Tata Motors had an average D/E ratio of 1.01, while Maruti Suzuki maintained a minimal ratio of 0.0008.
•Interpretation: Eicher Motors’ D/E ratio of 0.02 indicates a very conservative approach to leveraging,
suggesting financial stability and minimal reliance on debt, which is favourable compared to some industry
peers with higher leverage.
•2. Return on Equity (ROE):
Eicher Motors: 24.45%
Industry Average: The average ROE for the automotive industry was reported at 10.09% in the second quarter
of 2024.
•Interpretation: Eicher Motors’ ROE significantly surpasses the industry average, indicating efficient utilization
of equity capital and superior profitability relative to peers.
Financial RATIO ANALYSIS
•3. Earnings Per Share (EPS):
Eicher Motors: ₹136.98
Industry Context: EPS varies widely among automotive companies. For example, in the fiscal year ending March
2024, Eicher Motors reported a basic EPS of ₹136.98.
•Interpretation: A high EPS suggests strong profitability. Eicher Motors’ EPS indicates robust earnings generation
per share, which is a positive indicator for investors.
•4. Price-to-Earnings Ratio (P/E):
Eicher Motors: 33.08
Industry Average: P/E ratios in the automotive sector can vary. For instance, as of January 2025, Eicher Motors
had a P/E ratio of 33.08.
•Interpretation: Eicher Motors’ P/E ratio suggests that investors are willing to pay a premium for its earnings,
possibly due to expectations of future growth. However, it’s essential to compare this with specific peers to
determine relative valuation.
•Conclusion:
Eicher Motors demonstrates strong financial health, characterized by low leverage, high profitability, and efficient
equity utilization. Its financial metrics generally outperform industry averages, indicating a well-managed
company with a solid market position.
